Rumors of rising urea prices persist; ammonium chloride sees a favorable trend”_

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Rumors of rising urea prices persist; ammonium chloride sees an upward trend _ Author/Source: China Fertilizer Network Date: 2020-08-10 Clicks: 4 Recently, nitrogen fertilizer urea has become quite popular in the fertilizer industry, with its prices continuing to soar at an alarming rate. In many areas, the price increase has reached around 100–200 yuan per ton. Even though sales at the grassroots level are not good, wholesale prices remain high； Currently, the domestic agricultural market demand is weak, with sales occurring in small quantities; as a result, there is often a situation where goods are available but there is no demand for them. There is resistance to the higher prices of urea following its price increase. At the initial stage of this price rise, large agrochemical suppliers showed enthusiasm for purchasing urea, but as its price continued to soar, they became more cautious in their purchases. The operating rates of industrial compound fertilizer plants have been rising slowly, and the volume of raw materials purchased remains limited. The main reasons for the increase in urea prices are India’s successive tenders, along with maintenance activities carried out by some urea manufacturers. Until August 10th, urea prices remained favorable due to these factors, and the trend of rising urea prices continued. Has ammonium chloride, another nitrogen-based fertilizer, finally seen an opportunity? 　　Firstly, the upward trend in urea prices continues to support the price of ammonium chloride. Demand for urea in the domestic market is weak, which has led industry experts to express concerns about the long-term trend of urea prices and potential increases in those prices. As urea prices soar, a few urea manufacturers that were undergoing maintenance have resumed production; for example, a urea plant in Anhui has restarted operations, a urea factory in Hebei has increased its production volume starting today, and a newly commissioned urea plant in Shandong is also delivering goods as usual. As a result, the overall supply in the market has increased, leading to an imbalance between supply and demand in the domestic market ； However, the successive support from printing and labeling measures has driven up domestic urea prices, providing significant support for ammonium chloride and serving as a positive factor for the ammonium chloride market. 　　Secondly, the high operating levels of ammonium chloride manufacturers themselves are a factor that cannot be ignored, as are inventory levels. Recently, the soda ash market has seen a moderate rebound with prices rising in various regions, which has helped to alleviate the cost pressures faced by companies in the caustic soda industry during the first half of the year. As a result, these companies are likely to take advantage of this situation; there are no plans for maintenance in the short term. According to statistics from China Fertilizer Network, the overall operational rate of companies in this industry is around 72%. With the exception of a few ammonium chloride plants that are shut down on a long-term basis, all other plants are operating normally, and the level of operation is continuing to increase ； Additionally, a large plant in Henan still has plans to increase its ammonium chloride production, and the ammonium chloride production facility that is set to come online in Gansu in the second half of the year also deserves attention. 　　Domestic demand for ammonium chloride remains weak; sales by companies progress slowly, and there is a lack of large-scale orders to support the market. The overall operating rate of the compound fertilizer industry is rising slowly at a low level; according to statistics from China Fertilizer Network, it is currently around 57.17%. The terminal market is in a off-season for fertilizer use, resulting in poor revenue from wheat fertilizers, which in turn reduces companies’ enthusiasm for production. In the southern regions, rainfall has delayed the timing of fertilizer use and led to a significant decrease in consumption. Additionally, transportation was affected to some extent earlier on, causing a reduction in the speed of shipments and the amount of ammonium chloride delivered ； By the middle of the month, there is still demand for ammonium chloride in parts of North China and East China, though the volume of demand is limited. However, winter storage in the much-attentioned Northeast region remains a topic of expectation ； Additionally, according to some ammonium chloride manufacturers, the volume of exports and orders received is satisfactory, which helps to alleviate the oversupply in the domestic market. 　　Overall, taking everything into account, thanks to the rising prices of urea, ammonium chloride can also benefit and see its price remain stable. However, the support provided by urea is only indirect; what really matters is the supply and demand situation for ammonium chloride itself. With high production levels among ammonium chloride manufacturers and weak demand, it is expected that its price trend will remain weak, though there is still potential for improvement in the second half of the year. (Tan Junying)